안녕하세요. 고라소니의 영어로 경제보기 코너입니다.
오늘은 10/30/2019 자 월스트리트 저널의 기사를 살펴볼텐데요.
기사 제목은 What the Interest Rate Cut Means for You 입니다.
What the Interest Rate Cut Means for You
How the Fed’s move can affect your day-to-day finances
The Federal Reserve cut its short-term benchmark rate by a quarter-percentage point for the third time this year on Wednesday, lowering the federal-funds rate to a range between 1.5% and 1.75%.
Trade uncertainty and fear of slowing global growth likely prompted today’s decision—but what does it mean for Americans’ everyday lives? Interest rates affect the cost of borrowing, so falling interest rates can ripple through the cost of mortgages, the interest earned on savings accounts and more. Below, a few things to watch for:
Mortgages
The Fed’s previous two rate cuts sparked an increase in household spending, including boosting the mortgage market to its highest level since the financial crisis.
Right now, the average rate on a 30-year fixed mortgage rate is 3.75%, according to Freddie Mac. The yield on the 10-year Treasury note —currently around 1.8%— is used as a benchmark for different types of loans, including mortgages.
Falling interest rates could also mean it is a good time to consider refinancing. Black Knight Inc., a technology and data firm, reported a 75% increase in refinancing activity this July and August, compared with the same period last year.
Credit cards
A decline in interest rates can sometimes affect the average credit card annual percentage rate, or APR, which is pegged to the prime rate.
However, The Wall Street Journal recently found that even as interest rates fall, some credit card rates are going up. The average APR on interest-charging credit cards is near its highest in more than 20 years, about 17%, according to Fed data.
This is because popular, generous rewards and points programs are costing banks more, so many are raising rates to cover such costs.
High-Yield Savings Accounts & CDs
The interest rates offered on savings accounts and many certificates of deposit move with the federal-funds rate.
According to the FDIC, the average annual percentage yield on a one-year CD is 0.51%, and firms are continuing to cut rates on high-yield offerings. Goldman Sachs Group Inc. ’s Marcus account dropped from 2.0% in September to 1.9%, and Ally Financial Inc. ’s account dropped from 1.9% to 1.8%. Robo advisers Betterment and Wealthfront have also lowered the rates on their saving products to 2.04% and 2.07%, respectively.
Auto Loans
Auto loans have fixed interest rates, which are pegged to Treasury yields, but the falling interest rates won’t predict what dealers and auto-lenders can charge for your auto loan. At the end of October, the average rate on a five-year new car loan was 4.61%, according to Bankrate.com.
Student Loans
Falling interest rates may benefit you in other areas of your financial life, but your student loans, unfortunately, are less likely to be affected.
For those with federal loans, interest rates are already set every May, based on a 10-year Treasury note auction. These interest rates are fixed for the entire life of the loan. The rate for direct subsidized and unsubsidized undergraduate loans disbursed between now and June 30, 2020, is 4.53%. So while this latest drop in interest rates won’t currently affect those with federal student loans, next year it could have an impact on loans distributed for the 2020-2021 academic year.
If you have private education loans, however, you could pay less interest and could consider refinancing. Those rates are tied to the London interbank offered rate.
■ 고라소니와 함께하는 영어 표현 익히기
○ pegged: 일정하게 한, 안정된, 고정된
○ prime rate: 우대 금리
○ FDIC: Federal Deposit Insurance Corporation, 연방 예금 보험 회사
○ Treasury yields: 국채 수익률, 재정 수익
○ subsidize: 보조금을 주다
○ undergraduate loans: 학자금 대출들
○ disburse: 지출하다
○ academic year: (대학 등의) 학년도, 학년
What the Interest Rate Cut Means for You
The Federal Reserve’s third rate cut this year can ripple through American’s everyday finances, from mortgages to savings accounts and auto loans.
www.wsj.com
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